Spurred by an increase in demand for logistics and industrial property West Yorkshire looks set for the return of speculative “big hut” schemes — and record breaking rent hikes.
Birmingham-based commercial property developer Stoford and Kier Construction have both submitted planning applications for industrial units in the county and work has already started on a site east of Leeds, where the city council is supporting Muse and Wilton Developments with the delivery of three warehouse units, totalling 160,000 sq ft.
“Availability of units larger than 50,000 sq ft continues to diminish,” explained Nicholas Prescott, of Knight Frank’s Leeds industrial property team. “Existing supply currently stands at just under one-and-a-half million square feet, that’s 40 per cent down on the first half of last year.
“As a result, developers such as Stoford, Kier and Muse have submitted planning applications to speculatively develop new larger industrial units in the prime logistics locations,” he added.
Following some of 2014’s biggest second half lease deals — from the likes of packaging giant Samuel Grant, Speedy Hire and Express Bi Folding Doors — other manufacturers and distributors planning Yorkshire relocations are expected to maintain the pressure. Agents have already reported strong interest from delivery firm Geopost, the John Lewis Partnership, drinks distributor Matthew Clarke and the ABP Food Group.
“Driven by the lack of available modern premises, take up for pre-lets and design and build remained at a high level during the second half of last year,” added Prescott. “In particular, there was strong interest in 30,000 to 50,000 sq ft units, with the majority of second half demand coming from manufacturers and distributors.
“Take-up in the second half of 2014 was 42 per cent lower compared with the first half of the year, but that second half total was more than double that for the same 2013 period.”
And, adding a note of caution, Prescott said: “We foresee headline rents and freehold prices rising to new market highs as supply constraints, coupled with improving occupier demand, lead to further increases in rental levels as occupiers start to compete for the prime buildings and development opportunities.”
